The Trade Openness, Growth and Regional Inequalities Triangle: Case of Tunisia

The 1980s were a crucial stage in the process of free trade, with numerous countries implementing reforms aimed at greater economic openness. Many of these countries also signed up to regional agreements, leading not only the unprecedented trade liberalization, but also capital flows, with an ever-increasing openness to FDI. However, most countries observed that this process has gone hand in hand with a significant increase in inequalities, especially on the territorial level, with some regions benefiting more than others who have been left out and failed to reap the benefits of this economic integration. Based on panel data for the period from 1990 to 2020, our analysis focuses on the Tunisian case highlighting that although trade opening has boosted growth, it has also contributed to regional inequalities, exacerbating the already deep-seated territorial divide between the coastal and the inland regions, leading to an unbalanced distribution of FDI, economic activities and development levels, bringing with it its share of economic, political and social distortions.